Kaiser survey shows 9% jump in health premiums

NORTH BAY -- Health insurance premiums for employer-sponsored coverage increased by 9 percent this year, with the average annual cost of family coverage rising to more than $15,000, according to a survey by the Kaiser Family Foundation and Health Research Education and Trust.

The increase is steep and comes after several years of “relatively modest” premium increases, according to the survey, which noted that the increase on family premiums the previous year rose just 3 percent by comparison.

Employers on average paid nearly $11,000 toward those premiums, while employees paid an average of just over $4,100, according to the study, which surveyed small and large employers.

“This year’s 9 percent increase in premiums is especially painful for workers and employers struggling through a weak recovery,” said Drew Altman, Ph.D, chief executive officer and president of the Kaiser Family Foundation. The foundation is not associated with Kaiser Permanente.

Premiums increased significantly faster than employees’ wages, by a rate of 2.1 percent, and general inflation, by 3.2 percent, according to the study. And since 2001, family premiums have increased 113 percent, while employee wages and inflation increased 34 percent and 27 percent, respectively, by comparison.

Some possible reasons for the jump in costs include continually increasing health care costs, the notion that employees would use more health care services and, to some degree, federal health care reform, according to Mr. Altman. About 1.5 percent of the 9 percent increase is attributable to health care reform, the survey found.

Victor McKnight, a principal at the Petaluma branch of Edgewood Partners Insurance Center, said he’s seen similar increases for employers in the North Bay.

“I’m seeing employers continuing to balance between increases in copays and asking employees to pay more,” Mr. McKnight said, adding that he’s seen premium increases range between 9 percent on the low end and 15 percent on the higher end.

“The question is how do you mitigate the cost? The past few years, employers have reduced benefits,” Mr. McKnight said. “Many are now taking on an increase, but most are asking employees to pay more.”

The study, in its 13th year, also examined some of the already-implemented provisions of the 2010 Affordable Care Act and how it’s affecting employee coverage.

Around 2.3 million young adults were added by employers to their parents’ family health insurance policies as a result of health care reform, which permits adults up to age 26 without employer-based coverage to be covered by their parents’ plan, the study said.

The study also found an increase in so-called consumer-driven health plans – echoing a previously reported trend in the North Bay by Woodruff Sawyer & Company.

The study found that 31 percent of employees were enrolled in high-deductible plans, facing deductibles for single coverage of at least $1,000, with 12 percent facing $2,000 deductibles. Employees in companies of 3-199 workers were mostly likely to face high-deductible plans, the study found.

Such high-deductible plans, along with health savings and health reimbursement accounts, have doubled in the last two year — about 8 percent of all employees were enrolled in such plans in 2009, compared to 17 percent in 2011, according to the study.

Proponents of HSAs and HRAs often say such plans allow an employee more control over their health spending, while reducing premiums.

About 56 percent of employees included in the survey were in so-called grandfathered plans, meaning many recent changes mandated by the health reforms didn’t apply because employers didn’t change much in terms of employee cost or the level of benefits provided.

About 23 percent, or one in four, employees were enrolled in plans that changes cost-sharing requirements as a result of health care reform, according to the study.

Overall, the number of employers offering coverage was 60 percent – on par with previous years, the study found.

The survey included over 3,100 randomly selected, non-federal public and private firms with three or more employees.